Europe's STOXX 600 closes near record high; German elections in focus

By Pranav Kashyap and Johann M Cherian

(Reuters) -European shares settled near a record high on Friday and marked their longest streak of weekly gains in nearly a year, while Germany's DAX dipped as investors braced for the country's upcoming snap elections.

The pan-European STOXX 600 index added 0.5%, recovering from a one-week low on Thursday.

Healthcare stocks were among the top boosts to the index after the U.S. Food and Drug Administration said there was no longer a shortage of Novo Nordisk's <NOVOb.CO> popular weight-loss and diabetes drugs. Shares of the Wegovy and Ozempic maker advanced 5.8%.

The index was set for marginal weekly gains of 0.2%, logging its ninth straight week of advances — the longest since March 2024.

Throughout the week, investors maintained a cautious stance, evaluating the implications of U.S. President Donald Trump's tariff threats, a potential peace deal between Russia and Ukraine and the need to increase domestic military spending.

Investors will now turn their attention to elections in Germany on Sunday that could result in a conservative-led government likely to spend more to boost the economy, or a heavily split vote that leads to drawn-out coalition negotiations and political deadlock.

The country's benchmark index dipped 0.2%, while domestically focused midcaps, which analysts say are set to benefit if the constitutional debt brake is lifted, inched up 0.4%. On a year-to-date basis, midcaps have lagged the more export-focussed DAX, owing to a sluggish domestic economy.

Barclays' European equity strategists led by Emmanuel Cau said midcaps lagging suggest "that investors ascribe a low probability of successful growth-oriented policies from the new government. Both (the indexes) could thus benefit if the election result makes a grand coalition with two-thirds majority possible." 

In a reprieve for Germany's private sector, data showed business activity picked up slightly in February, although more broadly, euro zone business activity saw tepid growth.

Meanwhile, UK's Standard Chartered rose 3.7% after the lender announced a new $1.5 billion share buyback after reporting an 18% rise in annual profit.

Banks added 1% and emerged as the standout performer of the week, poised to secure its ninth consecutive weekly gain — the longest streak since February 1997.

Among others, the food and beverage index jumped 2.2% after three-straight sessions of losses.

Air Liquide added 3.2% after the industrial gases supplier raised its medium-term operating margin guidance and its 2024 sales slightly beat market expectations.

Ireland's Kingspan jumped 13% after the company reported upbeat 2024 results, while Elekta <EKTAb.ST> dropped 8.7% after the medical equipment maker cut its annual revenue and core earnings forecast.

(Reporting by Pranav Kashyap and Johann M Cherian in Bangalore; Editing by Janane Venkatraman, Shinjini Ganguli and Ros Russell)